Introduction To Law

INTRODUCTION TO LAW/ 1st Grade/GROUP 61 2012-2013

Lecturer: Julio Arriola Palomares
Faculty of Economics and Business Administration
University of the Basque Country, UPV/EHU

Full name: Aitor Marcos Diaz
Studies: Finance and Insurance
1.Introduction
The situation presented is the following one: The plaintiff asked for a6,000 euro loan. However, after 6 months agreement had been made, the petitioner took legal action against the entity when he realized that the total amount he will be paying at the end would reach to the sum of 14,805 Euro. The guarantee for the 6,000 euro was a mortgage on a property valued significantly higher.
My task consist on defending the validity of the agreed interest rate in thecase. In order to achieve that objective, I found provisions in National law and even one sentence of a court of judges to prove that the financial entity is in its right in every moment.
2.Discussion
In this section, we are going to argue about the legality of the event. In the next lines each article is classified orderly and argued in order prove the validity of our ideas.

* Civil Code* Article 1,740
Pursuant to the loan contract, one of the parties delivers to the other either …, money or another fungible article, under the condition to return the same amount of the article, and of the same kind and quality, in which case it shall simply be called a loan. The simple loan may be without charge or include a covenant to pay interest.
As it says here, once there’s anagreement for a loan, an interest can be included in the contract. So, firstly, we ensure that this first step is in the legal scope. The article 1,740 support us in order to make clear that charging with interests to the person who receives the loan is a completely legal action.
* Article 1,755
No interest shall be owed unless expressly agreed.
This article makes reference to the validityof the interest. Although an interest could have been agreed by both parts, the best way to show that it is expressly agreed is by a contract. In our case, we can ensure that such contract has been made, because in all activities of such nature, as we are a finance entity, is compulsory to make a contract. That means that we are in our right to reclaim our interests. *1
So, as we have seenalready in the Civil Code, they do exist relevant provision in favor of our point of view (Defending the finance entity). Besides, mercantile register provides us with legal arguments too:

* Code of commerce
Before we start arguing about the articles, we have to pay special attention to the article 311, in order to ensure that this loan is involved in a commercial activity. This isimportant because, if so, its business nature allow us to recur to the Code of commerce.
* Article 311.
The loan shall be considered as having a business nature when the following circumstances occur:
1. If any of the parties to the contract is a businessperson;
2. If the items lent are assigned to trading activities
As far as the business nature of our activity is concerned, the article 311clarifies that we are in our right to recur to the Code of commerce. So, we can keep on finding legal provision which support us in our cause:
* Article 314.
Loans shall not accrue interest if this has not been agreed in writing.
As we said before (*1), as a contract has been signed by the two parts, everything written in it has become directly part of the agreement. Consequently, theinterest has been agreed in writing.
* Article 315.
Interest on a loan may be agreed without any limitation whatsoever as to the rate or of any other kind. Anything to be rendered to the creditor shall be deemed to be interest.
This article may be the key of the question. Despite the fact that the interest agreed can be considerate disproportional, the article 315 support us alleging that...